What is the difference between a reverse mortgage and regular mortgage? Actually, not that much. You have the exact same responsibilities on a reverse mortgage as you would normally have on a regular mortgage (some may also call a regular mortgage, a conventional, forward or traditional mortgage).Forward mortgages require that you make monthly payments to pay down and eventually payoff the mortgage. Typically you can stretch out the payments of a forward mortgage to at least 30 years to make the monthly payments more affordable.
Reverse mortgages do not require a monthly mortgage payment, in fact, the reverse happens. The lender or bank is required to make monthly payments to you, if you choose that as one of your payout options. With a reverse mortgage you do not have to pay back the loan until you permanently move out of the house. Even if you took out the reverse mortgage at the age of 65 and you live to be 110 years old, as long as you live in the property as your primary residence you do not have to pay back the mortgage.
Just like a forward mortgage you must maintain the property on a reverse mortgage. All property taxes, hazard insurance, HOA fees and maintenance on the property must be up kept or you may risk losing your home to foreclosure.
The reason why so many consumers with reverse mortgages are in default is they are not keeping up with their end of the agreement, mostly not paying the property taxes when they become due. With a forward mortgage you can roll your taxes and insurance into your monthly mortgage payment, making it easier to pay. But with a reverse mortgage, there are no monthly payments to make, so the borrower is solely responsible for those taxes and insurance on their own.
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Difference Between a Reverse Mortgage and Regular Mortgage
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Reviewed by Merlyn Rosell
Published :
Rating : 4.5
Published :
Rating : 4.5